IRS Announces Quarterly Interest Rates

WASHINGTON - The Internal Revenue Service today announced that interest rates for the calendar quarter beginning January 1, 1999, will be seven (7) percent for overpayments (six (6) percent in the case of a corporation), seven (7) percent for underpayments, and nine (9) percent for large corporate underpayments. The overpayment rate for the portion of a corporate overpayment exceeding $10,000 will be four and one-half (4.5) percent. The interest rates in this revenue ruling reflect the amendment to section 6621 (a) of the Code eliminating the interest rate differential between overpayments and underpayments for taxpayers other than corporations.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point. The interest rates announced today are computed from the federal short-term rate based on daily compounding determined during October 1998.

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